Benton Harbor still deep in the red. Is the magic of an Emergency Manager simply not enough?

Joe Harris has been on the job as Emergency Manager in Benton Harbor for over a year and a half now. However, a recent report indicates the success he is credited for at “turning Benton Harbor around” may not be based in fact. Michigan Radio has this important story.

The State Treasurer’s office is reviewing an independent audit of Benton Harbor’s finances for the 2011 fiscal year. The audit shows the city still spent more money than it made during its first year under a state appointed emergency manager.

The audit shows Benton Harbor Emergency Manager Joe Harris cut the yearly operating deficit by about $126,000 from when elected city leaders were governing. The city still spent about $653,000 more than it took in for the fiscal year that began in July of 2010 and concluded at the end of June 2011.

“The point that I want to make is that the changes we made occurred during the year and we did not have a full year of cost savings,” Harris said. Harris was the city’s emergency financial manager for most of the 2011 fiscal year but became an emergency manager with more power in April of 2011 (more than 9 months into the fiscal year).

With these types of results, it’s puzzling as to why Harris has been talking about leaving by the middle of 2012. And considering how nearly every conservative commentator in the state is crowing about Harris’s amazing results in Benton Harbor, one wonders where they get their information from.

Why is it that Harris hasn’t had the success he’s claimed to have had? Could it be because, as I have said time and again, that these problems go far deeper than simple bookkeeping and union-busting? Could it be because Benton Harbor’s problems are systemic and relate to having nearly no manufacturing base and an education system that gives few of their residents the chance to succeed? Could it be that Benton Harbor is broke because there are no jobs and half its population is below the poverty line.

The answer is clearly yes and the sooner we quit pretending Emergency Managers can solve these issues with simple bookkeepping tricks and at the expense of public employees, the better off we will be.

Harris’s problems in Benton Harbor get worse, though. It turns out that under his watch the City is in violation of federal laws.

The audit outlined three accounting mistakes where the city violated state and federal laws (as stated in the audit) in fiscal 2011. Harris says those mistakes have been or are being addressed.

The City did not make timely payments to the IRS for FICA taxes (both the employer portion, and the employee withholdings) throughout the year. As of June 30, 2011, the outstanding liability to the IRS amounted to $402,305.

Harris reported in September the city has paid what it owed the IRS and the accompanying fines for being late.

While it appears that the City made a good faith effort to be timely with distributing current tax collections, we noted that as of June 30, 2011, the City still owed approximately $1,700,000 in back taxes to local entities. These balances appear to primarily relate to collections from prior years.

And there’s more. Read about it HERE.

On Sunday, I will have an op-ed published in the MLive newspaper the Muskegon Chronicle, challenging the lies, strawmen and obfuscation in an op-ed published yesterday and written by Steve Gunn from the anti-teachers union group Education Action Group. His piece is so rife with falsehoods and red herrings that it simply must be refuted. Stay tuned.

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